Static vs. Dynamic Segmentation Models for Customer Success

The same engagement strategies won’t work for all customers. The wrong actions, sent to the wrong customer at the wrong time can be deal-breakers. Each and every single engagement Customer Success teams should have with their customers - whether that’s in person, online, or automated - should deliver value and drive adoption and advocacy.

Paired with well-defined, action-driven high-touch and low-touch engagement models, a reliable account segmentation model allows Customer Success Managers’ time and attention to be where it needs to be. This ultimately means that Customer Success Managers can avoid spending disproportionate amounts of time on low paying customers and act proactively to identify risk and opportunities with high-paying customers.

Static vs. Dynamic Segmentation Models for Customer Success

Segmentation models have traditionally been thought of as static entities. A static segmentation model operates based on user demographics: industry vertical, revenue, amount of seats, or geographical location. Many companies make the mistake of aligning their segmentation model between Marketing, Sales, and Customer Success. This can happen, but the whole point of a segmentation model is to optimize workflows and playbooks, so it shouldn't happen by default.

A Marketing segmentation model should include things like how many times a lead has visited your website, how many emails they’ve opened, and an overall lead scoring system.

A Sales segmentation model will be based on things like deal size, and the likeliness of closing it.

What about Customer Success?

Value of the Customer: In short, how much is your customer paying you? This can be taboo, but it shouldn’t be. A high-paying customer should get the attention, assistance, and advocacy that they pay for. Making sure your biggest customers stay customers is important not only because they drive revenue, but because their expectations for ROI are much greater.

Customer Behavior: What is your customer doing with your product, and what are they not doing? You should know what the leading indicators of churn are, based on user data, and you should be able to segment customers accordingly. For instance, our Customer Success team at Amity looked at the behaviour of our churned customers vs. that of our renewing customers. Something as simple as the usage of Amity's search function appeared to be a key differentiator between churners and renewers.

Lifecycle Stage: It goes without saying that you should treat customers differently at onboarding, throughout adoption, at first renewal, and in their 3rd or 4th year with you.

Outcomes: Customers don’t buy a product, they buy a solution to a problem. So, is your customer getting what they paid for? Sometimes, a customer might be doing all of the right things, but they’re still not achieving the outcomes that they hired you to produce.

In a static model, a customer can be in one segment at a time (think of a pyramid with 4 tiers of customers). In a dynamic model, each customer can belong to many different segments at the same time, and can change as they make progress. With a Customer Success Management Tool, CSMs are able to set up fine grain rules to identify customers right when action should be delivered.

The Golden Rule of Account Segmentation

"Focus on actions, not attributes"

It ultimately does not matter what segments a customer is in if you don’t take action to deliver value and drive adoption. Once you have created those actionable groups of customers, you can focus on delivering the right strategies to each. All of your segmentation rules should be based on the actions you can, and should take based on a variety of indicators, as well as context.

Take this:

Customer X is in onboarding stage, and they’re not using a key feature identified as a driver of adoption. Action: send training material about the value of the key function.

Customer Y is a high-paying user, approaching renewal, and they’re not using a key feature identified as a driver of adoption. Action:reach out, and give a demo.

Customer Z is a low-paying user, approaching renewal, and they’re not using a key feature identified as a driver of adoption. Action: send 1:many coaching material, highlight the value of the key feature (different from onboarding material sent to X - it’s a bit too late for that, isn’t it?).

About the Author

Paul Philp is a leading innovator in SaaS and Customer Success. As Founder and CEO of Amity, Paul has spoken with Customer Success professionals from over 1,000 SaaS providers. Paul has a lifelong passion for helping business put customers first.